Which Carbon Credits Work And Which Are Just Climate Placeholders?

Forbes

08-07-2025

Carbon Credit Market
As the voluntary carbon market expands, not all carbon credits are created equal. In a climate economy increasingly scrutinized for greenwashing and impact-washing, the integrity of carbon credits matters more than ever. When executed with care and transparency, carbon credits can deliver real benefits for the climate, local communities, and the broader sustainable development agenda. However when the quality is compromised, carbon credits become little more than accounting tricks and attempts at bolstering ESG claims.
This final article in the series on carbon credits and carbon capture highlights five high-integrity carbon credit types to watch, three types to approach with caution, and what it all means for the planet.
Carbon Credits to Watch
Carbon Credits to Approach with Caution
Reforestation is a powerful tool for climate action, but only when implemented with ecological integrity. While trees naturally absorb and store carbon, poorly designed tree planting efforts can do more harm than good. Fast-growing, non-native species like eucalyptus and pine are often favored for their rapid carbon uptake but can deplete groundwater, reduce biodiversity, and increase wildfire risk. Similarly, planting trees in historically non-forested areas like grasslands or peatlands can disrupt local ecosystems. To ensure reforestation efforts are truly beneficial, projects must prioritize native species, local biodiversity, and long-term ecosystem health, not just carbon numbers. Typically, they may show short-term gains but are unsustainable long-term.
According to the June 2025 report "Built to Fail?" by climate watchdog groups using the AlliedOffsets Database, the Voluntary Carbon Market, a system where organizations voluntarily buy carbon credits to offset emissions, retired approximately 207.8 million credits in 2024. Shockingly, more than 47.7 million of these were classified as 'problematic,' meaning they are unlikely to deliver the promised emissions reductions. The study analyzed 47 of the top 100 global offset projects and found that 80 percent of their retired credits were flawed. Key issues included non-additionality (when a project would have occurred without carbon finance), impermanence (when stored carbon may be re-released), leakage (when emissions are displaced rather than reduced), and over-crediting (when a project's actual impact is overstated).
An alarming 93 percent of these problematic projects were located in the Global South, which includes regions such as Latin America, Africa, and Southeast Asia. These areas have historically contributed the least to climate change but are already experiencing its most severe impacts. The report also found that over 90 percent of the flawed credits were issued by Verra, the world's largest carbon registry, with additional problematic credits verified under Gold Standard, Climate Action Reserve, and ACR. Even projects rated by BeZero, an independent verifier, were found to carry moderate to high risks of fundamental failure.These findings raise a serious question: Why do major companies continue to depend on a carbon market that consistently fails to guarantee real climate outcomes?
Quality Over Quantity In Carbon Credit Market
The voluntary carbon market holds real potential, but only when the focus is on integrity, not volume. High-quality carbon credits, whether from cookstove initiatives or mangrove restoration, deliver measurable climate benefits and often support social equity. However, the proliferation of low-quality or poorly verified offsets dilutes the market's credibility and undermines climate goals. As the world leans into net-zero targets, companies and countries alike must prioritize credits that are additional, permanent, and independently verified. In carbon markets, as in climate action, quality is not optional. It is the difference between real progress and smoke and mirrors.